While the deputies will examine this Thursday a bill to allow the free choice of borrower insurance for mortgages at any time, the UFC-Que Choisir calls on them to resist attempts at manipulation by the banking lobby. Given the shortcomings of the current system, termination at any time is the assurance of a potential injection of purchasing power of 550 million euros per year for the benefit of all borrowers.
Borrower insurance, a real cash cow for banks
Banks amass each year nearly 7 billion euros in borrower insurance contributions to cover mortgages (1). Generally imposed on consumers, this guarantee can cover all or part of the maturities of the loan in the event of a claim (death, incapacity-disability, etc.).
Borrower insurance is above all a formidable cash cow for banks. Out of 100 euros of premium paid by the insured, only 32 euros are paid back in compensation. In other words, the banks make a margin of 68%. Such a level is unparalleled in insurance. By way of comparison, it is two to three times higher than those practiced in home and automobile insurance (2).
Under these conditions, and while in theory, it is possible to choose a different insurance from that offered by the banks, to change it during the first year or on the anniversary date of the subscription of the loan, how surprised at the pitfalls they set up to discourage borrowers (late responses, lack of response, unfounded refusals, etc.)? It should be recalled that in response, the UFC-Que Choisir launched a class action in order to obtain compensation for customers who were victims of such delaying practices at LCL (3), and that to facilitate the comparison of the offers available on the market and support consumers who choose to change, a dedicated service has been set up (4) at the following address: https://www.quechoisirensemble.fr/comparateur-assurance-borrower.
Cancellation at any time, saving 550 million euros per year for consumers
To finally make the free choice of borrower insurance a reality, a bill that will be debated this Thursday in the National Assembly provides for the termination of borrower insurance at any time. Supported by all the consumer associations (5), it is the appropriate remedy for the lockout of the market. In addition to being simple, this framework is practiced by policyholders and insurers in many other sectors (auto, home, health) and would make crude barriers to competition pointless.
Indeed, consumers will be able to more easily negotiate the insurance offered by the bank and/or replace it with an alternative contract. While being just as well covered, a 35-year-old couple who have been repaying their loan for 5 years can hope to save 13,000 euros. This amount can reach more than 15,000 euros for a couple of borrowers aged 55 who have just taken out their loan (6). Overall, for all the loans being repaid, households can on average obtain savings of at least 550 million euros per year (7).
A counter-flare from the banks to prevent termination at any time
Determined to jealously keep its pension, the banking lobby is firing on all cylinders to prevent the implementation of the measure, waving the red flag of the risk of demutualization while borrowers suffering from aggravated health risks are already numerous to ensure with alternative actors (8). Crédit Mutuel has announced that it will eliminate health questionnaires for some of its customers (9) while conditioning the measure to a seven-year period of banking immobility. Crédit Agricole, for its part, invited parliamentarians to cap the differences in insurance prices according to a ratio ranging from one to four (10).
The timing of these announcements leaves little doubt about the desire of the banking lobby to pollute the legislative debates. In addition to being based only on very precarious commitments and not being extended to all customers, they sound more like an admission of their bad practices, even like a lamentable bargain. As such, remember that with termination at any time, former patients can more easily take advantage of the right to be forgotten and obtain a contract without additional premium or exclusion.
Determined to finally make effective competition in the borrower insurance market beneficial to consumers, the UFC-Que Choisir, mobilized for a long time on the subject, urges deputies to institute termination at any time.
(1) French Insurance, Key Data 2020, French Insurance Federation, 2021.
(2) The gross margin is estimated from the claims/premiums ratio. On average out of 100 euros of premiums paid, 34 euros are kept in home insurance and 21 euros in car insurance. Estimates based on data from the ACPR Conference, November 23, 2018.
(3) Borrower insurance Group action against LCL, UFC-Que Choisir, 2020.
(4) Offered by SAS Que Choisir, a subsidiary of UFC-Que Choisir, registered with ORIAS as an insurance intermediary agent. The change assistance service is offered by a broker who pays on behalf of the Internet user using it a lump sum of 90 euros to SAS Que Choisir in order, in particular, to cover the costs of organizing the comparison service which is available to everyone free of charge.
(5) See the position expressed by all the consumer associations in the recommendation of October 12, 2021 from the CCSF on disability cover and the pricing of borrower insurance premiums.
(6) For a loan of 200,000 euros taken out at the rate of 1% over 20 years. Insured quota of 75% for each borrower.
(7) UFC-Que Choisir estimate based on the CCSF’s 2020 borrower insurance report.
(8) While the market share of alternative insurers is approximately 15%, alternative players represent 23% of insurance contracts having benefited from the AERAS convention in AERAS convention: Statistics 2019, FFA.
(9) This measure is specifically reserved for customers whose main income has been domiciled in the bank for 7 years and whose age is under 62 in Equality in health and access to property for all: Crédit Mutuel removes the questionnaire health insurance for its loyal customers, Crédit Mutuel, 2021.
(10) Bank insurers on the offensive in borrower insurance, S. Poullennec, E. Lederer, Les Echos, 2021.